Reddit: a small acquisition with big implications

Conde Nast’s acquisition of Reddit resonates all kinds of trends that are remaking the online publishing business.
Syndication: We’ve been saying for some time that publishers need to build sites that take advantage of syndication: “Deconstructing the Website”. The increasing prominence of aggregators like Digg, and maybe now Reddit, makes this more urgent.
Aggregation: Publishers need to aggregate as well as syndicate. This is a big untapped opportunity, but one that publishers must explore with technology partners. Reddit’s acquisition may give it an opportunity to provide aggregation services to news organizations. Conde Nast is owned by Advance Publications, which has 25 daily newspapers that could benefit from exploring aggregation.
Social Media: OK, the social media aspect is kind of a no-brainer, but the intersection of social media with syndication and aggregation is a key segment for publishers, and one that I’m exploring in my upcoming report on “Networked News”. Digg made this market famous, but this is a style of aggregation that should go beyond a single company.
Consolidation: We’re predicting continued consolidation in the Internet business, but it may seem counterintuitive to see a large, private, traditional media company acquire a Web company at this late (and expensive) stage. This isn’t anything on the scale of News Corp. buying MySpace, but it shows that you can’t count anyone out of the next phase of consolidation: either as a buyer or a seller.
Web 2.0: Reddit’s not all AJAX-y and bounded by rounded corners like most Web 2.0 sites, but it shows that lightweight database applications that transcend traditional single-site-oriented economics can reward their creators.
My recommendation to Reddit’s new owners would be to not seek false synergies in focusing on integrating Reddit with Conde Nast, but to their advertising, editorial, and financial resources to build an outward-looking business that can partner with other publishers, especially in the news business, to help them compete with Digg.
Originally published on my blog at JupiterResearch.